The U.S. may “potentially” default on its debt “as early as June 1, if Congress does not raise or suspend the debt limit before that time,” Treasury Secretary Janet Yellen said in a letter Monday to House Speaker Kevin McCarthy, R-Calif.
Alfredo Ortiz, president and chief executive officer of the nonpartisan Job Creators Network, says he’s “honestly not surprised” by Yellen’s letter, sent just days after the U.S. House of Representatives passed the Republican-led Limit, Save, Grow Act of 2023.
The legislation, which McCarthy introduced on April 19, would “limit federal spending, save taxpayer dollars,” and “grow the economy.” The legislation passed 217-215 in the House, but did not get a single vote from Democrats. Given Democrats’ control of the Senate, it is unlikely the bill will pass in its current form.
“Putting this now on June 1st, I think, basically, is to kind of try to force the hand of the Republicans,” Ortiz says. “But quite frankly, I mean, the Republicans, from my perspective, did what they had to do.”
“They passed the bill. That I think showed a lot of fiscal responsibility and hard choices that we have to make, and still allowed for $1.5 trillion of the debt to be raised,” he says.
Ortiz joins today’s episode of “The Daily Signal Podcast” to discuss the debt ceiling, President Joe Biden’s upcoming meeting on the issue with top Republican and Democratic congressional leaders, and why he thinks the Environmental Protection Agency “is out of control.”
Listen to the podcast below or read the lightly edited transcript:
Samantha Aschieris: Alfredo Ortiz is joining today’s episode of “The Daily Signal Podcast.” Alfredo is the president and CEO of the Job Creators Network. Thanks so much for joining us, Alfredo.
Alfredo Ortiz: Well, thank you very much for having me. Always appreciate the time.
Aschieris: Of course. Now, right here in Washington, D.C., one of the biggest topics is the debt ceiling. And Treasury Secretary Janet Yellen sent a letter to House Speaker Kevin McCarthy on Monday about the debt ceiling and wrote that “[a]fter reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1st if Congress does not raise or suspend the debt limit before that time.” First and foremost, what is your reaction to the secretary’s letter?
Ortiz: Well, I’m honestly not surprised. I mean, I know that they have been engaged in, basically, different mechanics to extend the debt ceiling deadline. Putting this now on June 1 I think, basically, is to kind of try to force the hand of the Republicans.
But quite frankly, I mean, the Republicans, from my perspective, did what they had to do. They passed the bill. That I think showed a lot of fiscal responsibility and hard choices that we have to make, and still allowed for $1.5 trillion of the debt to be raised. I mean, it’s not like they sat there and said, “No, we’re not going to raise it.”
So, from my perspective, I think the Republicans have done what they needed to do, and now this is sitting with the White House and the Senate. But the way that they always gaslight the American public is they’re saying that the Republicans are the ones that are basically holding the country hostage and that if it defaults, it’s the Republicans fault. Well, I completely disagree with that.
Aschieris: And just speaking of defaults, do you think it is possible for the U.S. to actually default on its debt?
Ortiz: I don’t think it will ever default on its debt. Honestly, I think people are aware of that. I know the last time we had the big close call with this, we got our AAA credit rating downgraded to AA. But in this particular case, I don’t see that being an issue.
And so, again, I think it’s almost typical D.C. politics of blaming each other back and forth for what’s happening instead of really dealing with the real problems that the American public is facing.
Aschieris: Now, President [Joe] Biden has invited the top congressional leaders, both Democrat and Republican, to meet next week about the debt ceiling. What are your thoughts on this meeting? Are you optimistic that something positive will come from it?
Ortiz: I don’t think this first meeting is really going to have any results. I think, as with everything in D.C., it’s going to come right down to the wire, probably the day before. Some package will be cobbled together and there will be some agreement. Both sides will claim victory, as it always is.
But quite frankly, I mean, you think about even that victory, we’re still talking an increase to the debt ceiling of $1.5 trillion. Somebody’s got to pay that tab eventually. And I think Republicans understand that, which is why they’re offering spending cuts.
I think it’s up to $5 trillion, but we have to do something to reduce the debt because eventually we’re going to get to that point where the interest payments alone are going to balloon to about 20% of federal receipts, and that’s going to be a major, major issue. And with the way interest rates are going, that is probably going to be the biggest concern of all. And so we have to reduce the debt.
Unfortunately, I think the Democrats don’t think that there is anything as a debt because they believe in Modern Monetary Theory, which basically says you can just print money to your heart’s desire and it doesn’t matter. And so, basically, they are putting on the American credit card all of these wacky social programs that is on their Christmas list and not worrying about how to pay for it.
Aschieris: Now, last Wednesday, the U.S. House of Representatives passed the Limit, Save, Grow Act of 2023. It was led by Republicans. The legislation passed 217 to 215. Four Republicans voted against the bill, which did not get a single vote from a Democrat. What are your thoughts on this legislation?
Ortiz: Well, we supported that legislation. I mean, we thought that truly is something that showed fiscal responsibility and the type of fiscal responsibility that we should have been showing for the past several years but haven’t.
I mean, the reason why I think we’re in the state of affairs that we are right now, and we’re seeing the collapse of three of the four largest bank collapses under the Biden administration, is because of the incredible inflation rates that we’ve been seeing that have hit the American public.
The [Federal Reserve] has had to respond with probably one of the fastest rate increases, I think, in 40 years to combat that. And unfortunately, the banks are the ones that are really getting hit hard.
In particular, I think, you had, the most recent one, First Republic Bank was impacted because it had a very significant mortgage portfolio. And quite frankly, then that portfolio, because of the rising interest rates, basically had no value because it was better just to buy T Bonds, basically T Bills, than it was the portfolio.
So, the portfolio became worthless and so once that had happened, the bank effectively was collapsed. But again, all that is thanks mostly due to the inflation caused by Biden.
Aschieris: And just before we shift topics, one last question on the debt ceiling. As we’ve been talking about, these conversations have been going on for months, especially here in Washington. What is one thing you want our listeners to know about these ongoing conversations regarding the debt ceiling and why it’s so important that so much attention is given to these conversations?
Ortiz: Well, the debt ceiling represents our credit limit for the American credit card. And I think everybody, probably all of your listeners and probably most Americans, have a credit card with a limit and they know you can’t go over that limit or you get in trouble. And we are at that point where we’re going to be over a limit.
We’re going to raise it if the Republican proposal is accepted by $1.5 trillion, but there has to be spending cuts, like I said. I mean, we’re going to get to the point where the interest payments alone are really going to exceed more than 20% of our federal receipts. And so this is a major, major concern.
And quite frankly, I don’t think interest rate increases are going to stop, I think we’re going to see at least a quarter-point increase tomorrow and probably down the road another quarter-point at least. So we’re well over almost 5.5% on the Fed funds rate. So again, this is a major concern. I think that will probably trigger a couple more banks, smaller banks, to buckle.
And unfortunately, it feels as though we’re just getting to that point, which I think it’s almost the intended consequence, frankly, of this particular administration and of Democrats, is to basically nationalize our banking system, very much like Canada, very much like Japan, where you only have a handful of banks. I think that’s where we want to get to because when you do that, you can exert full control from the federal government over that banking system.
Aschieris: Now, just to move to another topic, I wanted to discuss a recent op-ed that you wrote for Fox News. The piece is titled “EPA Is Out of Control. Here’s Our Plan to Stop Its Illegal Actions.” So first and foremost, as your title says, the [Environmental Protection Agency] is out of control, why is that?
Ortiz: Well, I mean, when you look at all the different proposals that it’s thrown on the table, that really is going to be impacting the everyday consumer. I mean, the list just goes on and on, from washing machines to dishwashers to your air conditioners. They’re basically in every single aspect of your life, they’re basically adding regulations that are going to really, I think, negatively impact the American way of life.
The biggest one where we decided we do have to step in and take some kind of action is on the [electric] vehicles, basically going from effectively 6% going up to about two-thirds of the cars out there in less than 10 years being electric vehicles.
I’m not against the issue of climate change, I think there is something that we need to do about the climate and any time we can do anything to make this earth healthier, we should do it. But this idea that everything has to be electric vehicles I think is an absurdity.
And when you look at all the different options that exist, we believe kind of in an all-of-the-above, there’s going to be some combination fossil fuels, natural gas, there might be hydrogen, there might be nuclear. We have to look at all these options, and I think it’s going to be a combination of options.
Again, when you look at just the electric vehicle market and the impact it’s going to have, I mean, have they really thought through all the different elements that it’s going to impact?
First of all, an electric vehicle, that’s about $67,000, this is the average cost of an electric vehicle. In talking to several dealers across the country, in particular, California, the door cost for replacing those batteries is somewhere about somewhere in the range of $25,000 to $30,000. I mean, this is not an easy issue for an average American consumer, they cannot afford it.
But guess what they’re doing? In California, very quietly, they’ve actually approved a 10-year auto loan. Why are they doing that? To “make it affordable for the California consumer.”
This is just gaslighting. Why don’t they say, “The truth is that we’re creating regulations that make it actually unaffordable?” I mean, to think about a 10-year loan on a car where it’s average life is expectancy is somewhere between six to seven years before you have to replace that battery, that’s a ridiculous thing to be able to expect the consumer to swallow.
Aschieris: And then just the second half of the title, your plan to stop the EPA?
Ortiz: Yeah, absolutely. I mean, well, as you know, we took action against the Department of Education on the latest overreach, the biggest overreach was about $425 billion estimated. I think it was the Penn Wharton study that did that number. So we sued the Biden administration on the college loan bailout because, again, we thought it was complete overreach by the Department of Education and this administration.
And so, again, similarly, we think that this is an overreach by the EPA. And so this idea that unelected bureaucrats are really, effectively—legislating to regulation has to stop. And so we said this before and we said it this time that when there’s actions like this, we will step in, especially when you have so many consumers and small businesses, really, that are going to be hurt by this kind of regulation.
Aschieris: Alfredo, thank you so much for joining us today. I really enjoyed our conversation and hope you’ll join us again in the future, as I’m sure this debt ceiling conversation is not going anywhere. And we’ll be keeping an eye on any further updates with the EPA and the Job Creators Network. Thank you so much.
Ortiz: Thank you so much, Sam. Appreciate it.
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